Alberta's oil bonanza

And God smiled on Calgary

An embarrassment of oil riches

“LORD, grant me one more boom,” said bumper stickers on Albertans' cars during the oil-price slump 22 years ago, “and I promise not to piss it away this time.” The Lord seems willing to give it a try. With oil prices in the $55-a-barrel range, Canada's oil-rich western province has more money gushing in than Albertans know what to do with. The problem—one the rest of Canada would dearly love to have—has become the underlying issue of next month's provincial election.

For residents of neighbouring British Columbia, where an economic comeback is just beginning, the scene in Alberta is mind-boggling. In Calgary, the centre of the oil patch, the business district bristles with construction cranes and new office towers, while new housing tracts spread over the surrounding hills. The talk is of six-figure home renovations and lunches with C$600 ($490) bottles of wine. “Calgary is on steroids,” says a local.

So is the capital, Edmonton, where numerous new townhouses are rising along the North Saskatchewan river, and new shopping malls and factories advance out into the prairie. Alberta is leaving other provinces far behind, growing its economy faster, attracting more newcomers, adding more jobs and paying higher salaries. Per capita GDP in the Edmonton-Calgary corridor is now 40% higher than in the rest of Canada, while the province has the lowest personal and corporate tax rates in the country. And this is attracting the investment that is now driving the province's prosperity, says Mike Percy, the dean of business studies at the University of Alberta: “Right now close to C$95 billion in capital investments are either under way or planned for the next decade.”

No wonder Alberta's folksy premier, Ralph Klein, was at his affable best on October 25th when he called a provincial election for November 22nd, his last after 11 years in power. With his Conservative government holding 73 of the 83 legislature seats and consistently drawing at least 50% support, he stands virtually no chance of defeat. Alberta is riding a string of surpluses: C$4 billion last year, maybe C$7 billion next year, with a C$12 billion rainy-day fund producing C$2.5 billion a year in income. It already has the C$3.7 billion in hand to wipe out the last of its debt this spring, making it Canada's first debt-free province. As the finance minister, Pat Nelson, told a business audience, “It doesn't get any better than this.”

But Albertans know the surpluses are partly artificial. Ten years ago, with a deficit looming, Mr Klein slashed spending by about 20% across the board. Now with a full treasury, critics say his government is still too tight-fisted in the face of about C$8 billion in delayed projects for schools, universities, hospitals, roads and sewers needed to meet Alberta's supercharged growth. Mr Klein has taken heat not only from opposition Liberals and New Democrats, but also from health, education and community groups and ordinary citizens complaining of a lack of long-term vision.

In his campaign, Mr Klein is promising to open the purse-strings to meet investment needs. But the long-term questions still remain. Within a generation the province's known conventional oil reserves will probably be depleted. And while Alberta has several hundred years' supply of oil locked up in oil sands (increasingly being tapped), only continued record prices will make these worth exploiting. So where, the opposition asks, is the plan to keep the good times coming? Or will Alberta once again break its end of the bargain with the Lord?